This week, the United States will conduct a new FOMC meeting in the early hours of Thursday, with the highly anticipated CPI inflation data set to be released on Wednesday evening. Global markets are on edge as they await these events. According to a report from Gold10, “Fed’s megaphone” Nick Timiraos indicates that most buyer economists and other professional Fed observers currently expect the Fed to cut interest rates once or twice in September or December. At present, there are two risks: one is that the Fed may interpret robust economic activity as insufficiently tight policy, signaling that high interest rates will not be maintained for long enough; the other risk is that the Fed’s preemptive actions may spark the market.
In fact, the upcoming inflation data and Fed interest rate outlook are crucial for BTC, with recent strong US economic data and the increasing negative correlation between Bitcoin and US bond yields giving investors reason to be cautious about potential heightened volatility before significant economic data. In the past 24 hours, BTC briefly rose to the $70,000 mark before quickly experiencing consecutive declines to a one-week low. This market trend is indeed worrisome, as even with a significant influx of funds into BTC spot ETFs in the previous week, it is not providing enough confidence support for investors in the current “critical 36 hours.” Anand Gomes from Paradigm commented that the crypto market is like an addict, constantly needing positive news to support it, as “No news is bad news in crypto.”
In terms of options, front-end IV has significantly increased in the face of uncertainty brought by US economic data and the market decline due to Bitcoin being sold off. There has been a large amount of buying of put options in ETH for various June expirations, and the proportion of buying front-end put options in BTC has also increased. However, at the end of June, a large number of call options with a strike price of $70,000 were sold off, leading to a significant simultaneous decline in front-end Vol Skew for both currencies.
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